Pakistan’s trade deficit has continued to improve in November 2019 as it was recorded at $1.795 billion showing a decline of 35.5% or $988 million as compared to $2.783 billion in one month. The government’s battle against the trade deficit is finally bearing fruit, as the trade deficit contracted fifth month in a row.
It is the lowest trade deficit recorded since February 2016, said Arif Habib Limited in its report.
The country’s exports during November 2019 increased by 9.6% to $2.02 billion as compared to $1.84 billion in 2018. While imports declined by 17.53% to $3.815 billion as compared to $4.62 billion last year.
Adviser to Prime Minister on Commerce, Textile, Industry & Investment Razzak Dawood tweeted:
Alhamdolillah! Pakistan’s Exports in Nov 2019 have once again CROSSED USD 2 BIL.LION mark. Hats off to our exporters & the team at M/o Commerce. Exports increased by 9.6% compared to 2018. Trade Deficit/Balance has shrunk by USD 988million in Nov-19 & by USD 5billion in 5 months. pic.twitter.com/HhSvAcHpKT
— Abdul Razak Dawood (@razak_dawood) December 1, 2019
Overall, Pakistan’s trade deficit contracted by a significant 34.42% in the first five months (July-November) of the financial year 2020, according to Ministry of Commerce. The five-month trade deficit (Exports-Imports gap) was recorded at $9.496 billion as compared to the corresponding period’s deficit of $14.479 billion.
During July-November, Pakistan’s exports were recorded at $9.55 billion, up by 4.8% as compared to $9.113 billion in the corresponding month. There was a massive decrease in imports as they decreased by 19.27% to $19.046 billion. During the same period last year, the imports were recorded at $23.59 billion.
The increasing trend in exports has resulted in improvement in Trade Balance & Current Account Deficit, tweeted the Advisor. He further stated that as a result of the government policies, the increasing exports are contributing to an improvement in the country’s balance of payment position and stabilization of the economy.
It is pertinent to mention that, for the first time, in the last four years, the country’s current account turned into surplus and was recorded at $99 million in October 2019.
CPFTA-II Phase Comes into Effect
The second phase of the China-Pakistan Free Trade Agreement (CPFTA) has come into the effect from (Sunday) allowing the Pakistani manufacturers and traders to export around 313 new products on zero duty to the Chinese market.
“The two countries have completed all the legal procedures and formalities to start the implementation of the agreement from today,” well-informed sources confirmed on Sunday.
Both Pakistan and China signed a protocol for the implementation of the agreement during the last visit of Prime Minister Imran Khan to China, under which, Pakistan has got the export concession on 313 new items.
Pakistan is already enjoying zero duty on the export of 724 products to China under the first FTA signed between the two countries in 2006. After the implementation of the second FTA, Pakistan has been allowed to export a total of 1047 products to China on zero duty.
According to the report, Pakistan can now increase its export around US$ 1 billion in the short term while the export of these items are likely to touch US$ 4-5 billion in the medium term after setting up a new industry in the special economic zones being constructed in Pakistan under China-Pakistan Economic Corridor (CPEC) flagship project.
After this agreement, Pakistan can enhance its exports to China up to US$ 10 billion in the next few years as the volume of the Chinese import market is around US$ 64 billion. Pakistan has already signed FTA with Sri Lanka, Malaysia and Preferential Trade Agreement (PTA) with Indonesia under its trade liberalization policy to enhance its exports.